Allied-Signal, Inc. v. Director, Div. of Taxation, 504 U.S. 768, 20 (1992)

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Cite as: 504 U. S. 768 (1992)

Opinion of the Court

is permitted by the mere fact of corporate presence within the State; and New Jersey offers little more in support of the decision of the State Supreme Court.

We agree that the payee and the payor need not be engaged in the same unitary business as a prerequisite to apportionment in all cases. Container Corp. says as much. What is required instead is that the capital transaction serve an operational rather than an investment function. 463 U. S., at 180, n. 19. Hence, in ASARCO, although we rejected the dissent's factual contention that the stock investments there constituted "interim uses of idle funds 'accumulated for the future operation of [the taxpayer's] . . . business [operation],' " we did not dispute the suggestion that had that been so the income would have been apportionable. 458 U. S., at 325, n. 21.

To be sure, the existence of a unitary relation between the

payor and the payee is one means of meeting the constitutional requirement. Thus, in ASARCO and Woolworth we focused on the question whether there was such a relation. We did not purport, however, to establish a general requirement that there be a unitary relation between the payor and the payee to justify apportionment, nor do we do so today.

It remains the case that "[i]n order to exclude certain income from the apportionment formula, the company must prove that 'the income was earned in the course of activities unrelated to [those carried out in the taxing] State.' " Exxon Corp. v. Department of Revenue of Wis., 447 U. S., at 223 (quoting Mobil Oil Corp. v. Commissioner of Taxes of Vt., 445 U. S., at 439). The existence of a unitary relation between payee and payor is one justification for apportionment, but not the only one. Hence, for example, a State may include within the apportionable income of a nondomiciliary corporation the interest earned on short-term deposits in a bank located in another State if that income forms part of the working capital of the corporation's unitary business, notwithstanding the absence of a unitary relationship be-


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